Impact of IFRS convergence in 2018 on Singapore Companies
Many listed companies in Singapore are not prepared for the approaching International Financial Reporting Standards (IFRS) convergence which is to be initiated in 2018. According to a recent poll by the Institute of Singapore Chartered Accountants (ISCA), only 9% had substantially completed the impact assessment of IFRS 1 – First-time Adoption of IFRS, and 25% are at the early stages of preparation work. This showcases us to the question of what will be the impact of IFRS on Singapore companies in the near future.
Impact on Singapore–listed companies
At present, listed companies in Singapore are reporting under SFRS. But, the introduction of a new framework identical to the IFRS may lead the companies to comply with requirements for the first-time adoption of the IFRS in IFRS 1 (First Time Adoption of IFRS) when they initially apply the new framework.
The application of IFRS 1 could lead to the restatements of previously reported financial information in respect of the comparative periods even though SFRS and IFRS requirements are substantially identical. This would be due to the different transition requirements between IFRS 1 and the individual SFRS standards applied to the existing financial statements.
Listed companies in Singapore applying the new framework will also have to apply the new major IFRS standards on revenue recognition and financial instruments concurrently, which will come into effect on the same date. They also have the option of applying the new major IFRS on leases at the same time.
Impact on the other Singapore-incorporated companies
Other Singapore-incorporated companies can continue to apply the existing financial reporting frameworks, including the SFRS, or may elect to apply the new IFRS 1 framework. However, whether or not these Singapore-incorporated companies opt to apply the new framework, or continue to apply SFRS, they will still be required to apply the new major IFRS standards on revenue recognition and financial instruments together with Singapore-listed companies, as those standards have been adopted as SFRS standards.
In conclusion, to ensure that Singapore companies are ready for full convergence with the IFRS in 2018, it would, therefore, be prudent to ensure that such entities carry out proper planning for the entire transitional exercise.
Impact on ACRA filing
Ever since ACRA mandated XBRL reporting of financial statements by companies in Singapore (with certain exempt categories), it has been challenging for companies to file accurate reporting. With IFRS convergence, the task is going to be even more challenging. A year ago, ACRA announced that it will notify Directors for ‘minor’ errors and name and shame Directors for ‘major’ errors in reporting, including XBRL reports.
It is therefore important for companies to focus on:
- IFRS convergence
- Error-free financial statement reporting
- Error-free XBRL reporting
How DataTracks can help
We at DataTracks help thousands of companies and intermediaries convert their financial statements to XBRL format which is free from errors as per ACRA recommendations. We ensure all our XBRL files are pre-validated with ACRA test system and clear all ‘genuine’ errors listed by ACRA. For more details, visit www.datatracks.com.sg